Efficiency, productivity gains, and the size of Brazilian supermarkets

Abstract The supermarket sector is an important segment of the Brazilian economy. In recent years, the role of large retailers and market globalization has transformed this sector in one of the most competitive in the country. This paper aims to evaluate the technical efficiency and scale of the Brazilian supermarket sector through Bootstrap Data Envelopment Analysis, and to measure changes in productivity from 2005 to 2012, applying the Bootstrapped Malmquist index. A second stage analysis is performed to explain efficiency levels and productivity gains in terms of supermarket chains characteristics. We found that the Brazilian supermarket chains have low average efficiency levels and, in general, there was an increase in productivity in the period. The consolidations that took place in this sector can be explained in terms of scales of operation. Small supermarket chains had lower efficiency levels both in 2005 and 2012, but experienced higher levels of productivity growth in the period. Results of second stage analysis shows that some supermarket chains characteristics are correlated to productivity gains.